Definition of countercyclical stocks

stocks that tend to rise in value when the economy is turning down or is in recession. Traditionally, companies in industries with stable demand, such as drugs and food, are considered countercyclical. Some firms actually do better when the economy or stock market is in turmoil. For example, firms offering money market mutual funds may enjoy an inflow of cash when stock prices fall. Temporary-help firms may benefit if companies are cutting costs by laying off full-time employees and replacing them with temps. Companies that can perform various functions for other companies more efficiently and at lower cost (called outsourcing firms) will tend to benefit during economic downturns.